Corporate Favoritism occurs anytime a business or class of businesses receives special, favorable treatment in tax law, regulation, or direct or in-kind subsidies that other businesses do not receive. Income tax law is replete with such special carve-outs. While it is arguable that corporate income taxation should cease, re-emphasizing dividend payouts by eliminating double-taxation, all businesses should be treated equally by the government in order to minimize economic distortions, which misallocate resources and make us less prosperous. Justice demands such equality.
"Multilateral Disarmament: A State Compact to End Corporate Welfare" by Byron Schlomach, Stephen Slivinski, and James Hohman (jointly published by the Mackinac Center for Public Policy and the 1889 Institute) comprehensively discusses various forms of corporate welfare, corrects the New York Times' ranking of states based on corporate welfare granted, and proposes a comprehensive solution for ending corporate welfare across the states. Executive Summary
"Wind Energy in Oklahoma: A Costly Solution in Search of a Problem" by Robert Michaels (California State University, Fullerton economics professor) rigorously demonstrates that wind electrical generation is very costly and that subsidies for wind energy through tax credits at the federal and state levels merely hides these costs even as they drive increased wind energy investment. What's more wind generation accomplishes little in reducing carbon-dioxide emissions and, even if it did, potential reductions in Oklahoma would be insignificant globally. Finally, while wind power subsidies destabilize Oklahoma's state finances, they provide a negligible amount of property tax funding to schools. Additional contributions in the paper are provided by Per Bylund, Paul C. Knappenberger, and Byron Schlomach. Summary
"Critique of the Incentive Evaluation Commission's Tax Incentive Evaluation Report: 2016" by Byron Schlomach looks at the first report of Oklahoma Incentive Evaluation Commission (IEC) and finds it wanting. The IEC was created to review Oklahoma's many tax incentives for industry over a period of years. In their first round of recommendations, they suggest repealing only four of eleven reviewed incentives. The Institute suggests repealing nine. Apparently, the IEC is more interested in the status quo than real reform, having made unique recommendations with only $3 million in financial impact. Therefore, the IEC should be abolished. Summary
The 1889 Institute seeks to document corporate welfare at the state and local levels in Oklahoma with the aim of encouraging their elimination. We will document corporate welfare as it is identified and add it to the list.
Tax Increment Finance Districts (TIFs) - When towns, cities, or counties create TIF districts, tax revenues that result from additional sales or increased property taxes are not shared in the community as a whole but are concentrated on the district. TIFs burden those not in the TIF to support community-wide infrastructure and schools. TIF money is often spent on private investment and favors large corporations.
Wind Energy Tax Credits - Oklahoma provides a half-cent per kilowatt hour income tax credit for wind generation. This represents a subsidy to the wind energy industry and is very costly given the need to double-up on electrical generation capacity.